Gold & Silver Digest: 1/15/13
The Gold & Silver Digest contains headlines of stories that members of this group deem relevant and/or interesting to precious metals enthusiasts.
If you have articles to submit for the next digest, please email them to me by clicking here.
1/15/13 5:51 PM EST US close metals price quotes from Finviz
(Kitco News) - Comex gold futures prices ended the U.S. day session moderately higher and hit a fresh two-week high Tuesday. The precious yellow metal saw some fresh speculative and technically related buying interest as the near-term chart posture is improving. Gold and silver also saw some fresh demand surface following bullish comments from U.S. Federal Reserve Chairman Ben Bernanke. February gold last traded up $13.00 an ounce at $1,682.30. Spot gold was last quoted up $14.80 at $1,683.00. March Comex silver last traded up $0.34 at $31.45 an ounce.
Fed Chairman Bernanke late Monday said the U.S. economic recovery is still fragile and strongly hinted that the Fed’s monthly bond-buying program will not end any time soon. That was a bullish development for the raw commodity markets, including the precious metals. The most recent FOMC minutes had shown some Fed officials were in favor of ending the bond-buying program at year end.
Germany’s Bundesbank is to repatriate gold reserves held abroad to tighten control and combat currency crises in the future, pulling a chunk of its holdings from New York and all its bullion from Paris.
The move marks an extraodinary breakdown in trust between leading central banks and has set off ferment among gold enthusiasts, with some comparing it with France’s withdrawal of gold from the US under President Charles de Gaulle as the Bretton Woods currency system crumbled in the early 1970s.
So, to mark the demise of the trillion-dollar coin idea, platinum just did something it’s not managed in almost a year. Its price rose above the price of gold Tuesday morning for the first time since mid-March 2012.
Indeed, while gold and related cash-price proxies like the big SPDR Trust (NYSE:GLD) have risen 1.0% since New Year’s Eve, and the SLV is up a bit more, the price of platinum – most easily traded by private investors through the white metal’s ETF, PPLT – has risen by 11.4%.
(Reuters) - India's passion for gold is putting such a strain on state finances that the government may slap higher import taxes on the precious metal, but demand buoyed by heady inflation and meagre savings will blunt the impact of any rise in duties.
Initial success from a tax hike in March last year was stifled by the arrival of major festivals such as Diwali, when gold is a must-give present, and the winter wedding season.
That has scuppered New Delhi's goal of reining in spending on gold by around a third to $38 billion in the fiscal year that ends in March, prompting Finance Minister P. Chidambaram to say another tax increase could be on the cards.
Danske Bank A/S and Credit Suisse Group AG, the most-accurate gold forecasters, say prices will probably peak this year while their nearest rival, UniCredit SpA, sees no end in sight to the 12-year bull market.
Gold will average $1,720 an ounce this year and $1,600 in 2014, said Christin Tuxen of Danske Bank in Copenhagen, who came closest to predicting moves in the past eight quarters, according to data compiled by Bloomberg. Tom Kendall at Credit Suisse in London expects $1,740 and $1,720 and Jochen Hitzfeld of UniCredit in Munich predicts $1,700 and $1,800. Bullion rose more than sixfold since the bull market began in 2001.
Turkey’s multi-billion-dollar gold sales to neighboring Iran could put the country on a collision course with its close ally, the United States, when high-ranking diplomats from the two countries hold talks in Washington.
Turkish Foreign Ministry Undersecretary Feridun Sinirlioğlu was scheduled to be in Washington from January 14-16 for discussions with State Department officials, including US Deputy Secretary of State William Burns. The gold sales were expected to come up during the talks, which will cover a broad range of Middle East-related topics. But a senior Turkish official told EurasiaNet.org that Turkey itself did not intend to raise the gold-for-gas issue.
HardAssetsInvestor: What is the issue in the gold market that most concerns you?
James Turk: The biggest issue is government policy. It’s been quite clear that governments have been trying to keep the gold price from rising. But it’s inevitable the gold price will rise when national currencies are being debased, as they all are being now. And rather than let the free-market forces take over, governments are trying to deny reality. They're trying to force the market into thinking that gold really isn't worth what the market says it’s worth. Governments are engaging in anti-gold propaganda and various interventions. It’s exactly like the 1960s, which I lived through and remember well.
HAI: Why would a central bank, which presumably is also buying gold for its reserves, want the price to be lower? Isn't that an investment that the bank has as well?
Turk: First of all, gold is not an investment.
It’s money. It’s not an investment because it’s a sterile asset. It doesn’t generate cash flow. It doesn’t have a balance sheet, management team, PE/ratio or anything like that. And in fact, gold doesn’t create wealth. Money doesn’t create wealth until you put it at risk. Money only creates wealth if you invest it or you lend it or you deposit it. But gold itself doesn’t create wealth. Dollars don’t create wealth unless you deposit them in a bank, lend it to somebody, or invest it in securities. It’s the same thing with gold.
I’ve been following gold professionally for some 40 years, ever since joining Citibank as an international economist back in 1973. One of my early assignments was to write a report for senior management on the future role of gold in the world monetary system. Gold had already risen from $35 an ounce in August 1971, when President Nixon ended the US dollar’s official convertibility into gold, to $120 an ounce in mid-1973 when I joined Citibank as one of the most junior economists.
Though I thought the price of gold could rise, if only because its price had been suppressed and private demand quashed since the 1930s, I saw no return to anything that might resemble a gold-based world monetary system.
Last year marked the third consecutive year that the U.S. Mint saw sales decline for gold American Eagle coins.
Listen to market chatter and you may be led to believe that gold is the hottest commodity on the planet and everyone is buying. Look at the data and you may find a different story.
The U.S. Mint reported that gold coin sales declined 25 percent to 753,000 ounces in 2012, the lowest level since 2007.
Note: If you're reading this and are not yet a member of Peak Prosperity's Gold & Silver Group, please consider joining it now. It's where our active community of precious metals enthusiasts have focused discussions on the developments most likely to impact gold & silver. Simply go here and click the "Join Today" button.